Immigration Reform or Central Planning

The klieg lights
of the media often turn thoughtful policy discussions into
cartoonish debates, and this habit is distorting the Senate's
consideration of immigration reform. Libertarians and pro-business
conservatives who favor immigration and open borders are supposedly
squaring off against conservatives who favor law, order, and
national security. But the strongest libertarian advocates of free
markets might want to take a closer look at the details of the
Comprehensive Immigration Reform Act (CIRA, S. 2611). The 600-page
bill is stuffed with provisions that are difficult to decipher,
some good, no doubt, and some that are alarming. Alarms bells
should be ringing at the idea of creating a new bureaucracy within
the Department of Labor tasked with centrally planning labor
markets for untold numbers of guest workers. This would be a
mistake.

If the goal of
immigration reform is to enhance the liberty and prosperity of the
U.S. and its citizens, then a robust flow of immigrants is
desirable.[1]
But that logic hinges on two assumptions: that immigrants are
coming to America for work, not welfare, and that reform will
improve, not hinder, the labor market.

Why Citizenship?

A central plank of
the current Senate legislation is a
guest worker program that treats existing illegal immigrants and
future work migrants as completely different classes.
Heritage Foundation scholars have been long-standing advocates of a
temporary guest worker program-even arguing that immigration reform
without it is "bound to fail." But why
create a guest worker program that excludes existing migrant
workers?

A smart reform bill would reject the false
choice of treating guest workers as (A) felons or (B) citizens.
Principled reform would simply give illegal immigrants a
chance to become legal, identifiable, temporary workers. This
would not preclude them from applying for citizenship; rather it
would treat them the same as other hopeful applicants living
abroad. No reform should preclude temporary workers from pursuing
assimilation or citizenship; their status simply shouldn't
guarantee them citizenship.

Neither
Limited, Temporary, or Free-Market

The Senate has
devised a guest worker program that would extend bureaucratic
control over some 5 percent of the labor force, via wage controls
on the private sector. Rather than establish a simple cap on the
number of temporary visas issued each month (which could be
distributed fairly in a simple monthly auction), the Senate
bill would create of a new Department of Labor bureaucracy that
would be nothing less than a central planning agency for the U.S.
labor market. This is a bad solution for several reasons:

Ripe for
Political Manipulation. The legislation envisions a "Temporary
Worker Task Force" with ten members (all political appointees from
the federal government, none from states). More explicitly, the
Secretary of Labor would determine which occupational categories in
the U.S. have unmet demands for labor. This structure is ripe for
political pressure. Would industry lobbyists not get a friendly ear
when they pressed allied legislators and appointees for increased
quotas in their sector? Or what if a labor union demanded fewer
immigrants in its sector? Markets, not bureaucrats and certainly
not politicians, should determine the equilibrium for wages and
where labor is employed.

Dramatically
Expands Prevailing Wage Rules. Centrally controlling wages for
every possible occupation is a breathtakingly ambitious project but
would be mandatory for guest workers under the S. 2611.[2]
Such micromanagement of the prices of heterogonous labor is
hopeless because supply and demand for various skills are
constantly evolving in unpredictable ways. On Friday, the Senate
adopted by voice vote an amendment from Senator Barack Obama (D-IL)
to make the Senate plan's prevailing wage provisions even stronger.
In his words, "This amendment would establish a true prevailing
wage for all occupations." If the Senate passed a law outlawing
supply and demand, it would hardly be more amazing. Senator Obama
summarized, apparently with no protest from other Senators, that
the goal of his amendment is to ensure prevailing wages "apply to
all workers and not just some workers." That is a chilling
thought.

Bogs Down the
Labor Market. A dynamic economy requires its labor market to
adjust constantly to different types of work (e.g., the burgeoning
demand for software programmers, physical therapists, and nurses).
A static, centrally-planned system assumes change must be justified
and will slow economic growth.

Inefficient
Paperwork Favors Big Firms. The law would require potential
employers to submit paperwork making ten different certifications,
including that any migrant worker won't impact wages in the
specific occupation they are entering. Employers also have to go
through a Kabuki dance of certifying that no native worker could be
found to do the work. Do Ohio companies have to do this when
employing people from Michigan or Indiana? Expecting companies to
resolve issues that remain unresolved by the sharpest academics in
the world is folly. Such paperwork is ridiculous, inefficient, and
especially prohibitive to small employers.

A Dangerous
Precedent for Labor Market Intrusion. If the guest workforce
reaches 7 million, then central planners will control 5 percent of
the labor market. Once the pattern is established, what is to stop
the new bureaucracy from "fixing" the labor market for all
low-skilled workers, and then for all young workers, and then for
all workers? Extending prevailing wage rules to the private sector
creates a slippery slope.

Inefficient
Centrally-Planned Markets. This kind of program is based on
the fallacy that governments can centrally measure and plan
the quantities and prices of labor and goods better than markets
can. The history of failed socialist economies in Eastern Europe
should not be so easy to neglect.

President Bush has rightly called for
a principled approach to immigration. The President should
clarify that, while immigration reform
should incorporate a guest worker program, that
program must be crafted carefully. It should not include a new
citizenship guarantee. And just as importantly, policymakers should
craft a free-market framework for guest workers, not a new federal
planning agency. Not only is central planning of migrant labor
markets bound to fail, but it is also ripe for corruption and
political manipulation. This is exactly the wrong direction for
immigration reform and sets a dangerous precedent for what a Labor
Department might do to native workers in the future. These are
criticisms of the current Senate bill that all conservatives, and
indeed all Americans, should be able to agree on.

Tim Kane,
Ph.D., is Director of the Center for International Trade and
Economics at The Heritage Foundation.

[1]
The positive economic impact of immigration was described in
Heritage Backgrounder No. 1913, "The Real Problem with
Immigration … and the Real Solution," by Tim Kane and Kirk
Johnson, March 1, 2006.

Share

The Senate's 600-page immigration reform bill is stuffed withprovisions that are difficult to decipher--some good, no doubt, andsome that are alarming. Alarms bells should be ringing at the ideaof creating a new bureaucracy within the Department of Labor taskedwith centrally planning labor markets for untold numbers of guestworkers. This would be a mistake. Governments cannot measure andplan the quantities and prices of labor and goods better thanmarkets can. The history of failed socialist economies in EasternEurope should not be so easy to neglect.

Rep. Peter Roskam (R-IL) says it's "a great way to start the day for any conservative who wants to get America back on track."

Sign up to start your free subscription today!

Sorry! Your form had errors:

About The Heritage Foundation

The Heritage Foundation is the nation’s most broadly supported public policy research institute, with hundreds of thousands of individual, foundation and corporate donors. Heritage, founded in February 1973, has a staff of 275 and an annual expense budget of $82.4 million.

Our mission is to formulate and promote conservative public policies based on the principles of free enterprise, limited government, individual freedom, traditional American values, and a strong national defense. Read More